Health Care vs. High-Tech in War over Obvious Patents?

It’s not often that Science contains an analysis penned by a lawyer. But the lawyer in question, Michael R. Samardzija of the M.D. Anderson Cancer Center’s Intellectual Property office, suggests that the US Supreme Court is weighing an issue that may pit parts of Science’s readership against each other. At issue are cases where a patent covers a development that is obvious, and the analysis suggests that while the health care industry (including biotech) likes the current system, high-tech firms such as chipmakers are finding it a barrier to innovation.

The subset of patents in question are those that combine features that are separately unpatentable due to prior art. One of the key standards these combinations are subjected to is whether they are “obvious.” The legal definitions by which obviousness is evaluated are complex, but Samardzija suggests that they boil down to weighing whether a development was inexorable, while avoiding determining obviousness via 20/20 hindsight.

Samardzija indicates that the high-tech industry is feeling restricted by the current use of the obviousness standards, a conclusion consistent with our previous coverage of the issue. He cites figures showing that, by 2002, over 90,000 patents had been issued that cover various aspects of CPUs, and he suggests that many of these covered incremental improvements. As a result of this density of patents, he notes that figures from 1991 indicate that US companies spent approximately $300 million on R&D, but over three times that on patent-related legal maneuvers. The net result is that high-tech industry feels that its innovations are commonly running into expensive legal hurdles. As a result, they’d be happy to see far more patents denied on obviousness grounds.

In contrast, the healthcare industry has consistently fought for extended and strong patent rights, and has argued for maintaining the status quo in this case. Samardzija cites a number of cases where drug companies have patented either new uses of existing compounds, or combinations of drugs which had previously been patented separately. To the drug companies, changing the obviousness rule would not only mean a potential end of patents for products already on the market, but would presumably eliminate the chance of protection for a number of drugs in their pipelines.

Somewhat oddly, the case (KSR v. Teleflex) that started two of the leading technology industries scrambling dealt with a patent for pedal controllers for electronic throttles that were smaller, less complex, and cheaper than anything on the market. The holder of the patent has sued a competitor, who claimed in defense that such a device was an obvious evolution of those already on the market and should not be provided patent protection. As the case made its way through appeals, it became apparent that it would be determined on grounds of obviousness, and provide the Supreme Court with an opportunity to revisit this issue. As a result, alliances of chipmakers and health care industries have both pushed for their vision of obviousness to be adopted (the EFF has chimed in, too). Whichever industry walks away unhappy when the decision is released may be facing a very different economic landscape in the future.